Due diligence checklist
I often get asked by many investors how to determine where and when to invest in the US property market, especially when I am in Australia.
Blogger: Mark Rooney, Investinus Group
As I have pointed out to many people, especially in the free 4 week course that I designed on 'How to invest in the US property market', it is about the contacts and relationships that I have built over time. It is important to keep these people close to you and incentivized. Like any business you have close associates and consultants helping you and the business every step of the way so you should with your investing.
Due diligence isn’t just important, it is critical to your success. Business decisions are based on solid information, you must be able to justify your decisions based on due diligence, especially when you are doing it from so far away. Most investors I have assisted do not have the time to go into the details as much as I have therefore I have found that a critical part of offering advice about the US market is to have the specific areas that I am focusing on along with the information about those areas available.
Here is a very thorough checklist of due diligence item that should be completed:
1. All Comps For Sale, Active and Pending Sales – Get Comps for the last 3-6 months within .5 to 1 mile. Also do it for the last 3, 5, even 10 years to see trends and the full story. (Remember that these are already outdated bits of information)
2. CMA, Comparative Market Analysis – Get a CMA so you can see how everything stacks up, average listing price, for sale price, property size, beds, bath and even average time on market.
3. Number of foreclosures – Too many foreclosures can put downward pressure on an areas value, but you do want opportunities, so read into this information with your interests at heart I would suggest.
4. Number of rentals vs. home owners – This will be important to determine if it is a flip or rental.
5. Number of for sale vs. sold comps – This is also crucial to determine if it is a flip or rental as you can see your competition and the areas pride of ownership.
6. Crime, Unemployment, Population, other trends – Warzones and declining areas are to be avoided. Upside potential is what you want.
7. Schools, shopping, entertainment, parks, transportation, desirability – People want to live in desirable areas with these amenities.
8. Exit strategies – Thoroughly analyze your exit strategies, create backup plans and ensure you have strong multiple exit strategies. This is one of the most important components of your success. Feel free to connect with me if you need any assistance with creating an exit strategy.
9. Worst/Best/Expected Case Scenarios – Analyze worst case scenarios, best case scenarios and the expected scenarios. Be realistic, conservative and understand the risk.
10. Relationships – When completing an international purchase a lot of this information you will find is done by your assisting or buyer’s agent there such as Investinus Group Inc. We have been doing this for a number of year assisting our investors. Please consider using someone who has already had success when investing internationally, it can be fraught with challenges and at the end of the day you will need a solid group around you to build that portfolio.
About Mark Rooney
Investinus Group's Mark first found out about the advantages in the U.S real estate market in February 2002, whilst on a business trip to Canada and the U.S.A. The initial contacts made were able to assist with learning and studying the market place and how an Australian can invest into the U.S market safely and also have assurance that a team there can protect the asset.
For the next 4 years Mark researched the U.S real estate market and looked for opportunities to build further relationships with people. Over the next few years Mark gained an understanding of the various cities and what investment outcomes they provided a foreign investor.
In 2009 Mark was asked to assist others with purchasing property in the U.S.A. This was the initial beginnings of Investinus Group, whose focus is ensuring that their clients have a safe and secure investment in U.S. real estate.
The group aims to build strong relationships with their clients and the people who work with them, suppliers, property managers, attorneys, accountants and developers.
